This paper presents an endogenous growth model with public capital and public debt. The primary-surplus-to-GDP ratio is set such that it is a positive function of the debt ratio, which is a necessary condition for the intertemporal budget constraint of the government. The paper studies growth and welfare effects of the model, assuming a balanced government budget, and compares the outcome with the scenario where public debt grows in the long run, but at a smaller rate than capital and consumption, and with the scenario where public debt grows at the same rate as capital and consumption.

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Greiner A. Does it pay to have a balanced government budget? JOURNAL OF INSTITUTIONAL AND THEORETICAL ECONOMICS-ZEITSCHRIFT FUR DIE GESAMTE STAATSWISSENSCHAFT. 2008;164(3):460-476.

Greiner, A. (2008). Does it pay to have a balanced government budget? JOURNAL OF INSTITUTIONAL AND THEORETICAL ECONOMICS-ZEITSCHRIFT FUR DIE GESAMTE STAATSWISSENSCHAFT, 164(3), 460-476. doi:10.1628/093245608785363399

Greiner, A. (2008). Does it pay to have a balanced government budget? JOURNAL OF INSTITUTIONAL AND THEORETICAL ECONOMICS-ZEITSCHRIFT FUR DIE GESAMTE STAATSWISSENSCHAFT 164, 460-476.

Greiner, A., 2008. Does it pay to have a balanced government budget? JOURNAL OF INSTITUTIONAL AND THEORETICAL ECONOMICS-ZEITSCHRIFT FUR DIE GESAMTE STAATSWISSENSCHAFT, 164(3), p 460-476.